The Deadlock Contract – Avoiding a stalemate deal

18 Aug The Deadlock Contract – Avoiding a stalemate deal

Have you ever priced out a project for a client, only to find out later that they expected you to give more than you agreed to, and then you realize too late that you greatly UNDERPRICED the project? We’ve done this once or twice, but last years was the most disappointing, because we lost the deal entirely.

Drew was approached by Sesame Workshop to do a co-branding clothing line, which means that their characters and Drew’s logo and art would be on the designs, and we would share in the royalties. It was an exciting project, and we had two separate meetings in New York with them to plan it out. I priced out the initial advance, and we were good to go UNTIL – the contract phase, and that’s when the problems began:

Before I get into the boring contract stuff, let me tell you, the really fun stuff was that SW wanted to bring their characters to the surf. And what better guy to do that than Drew? Drew had an even better idea, to bring SURF to the STREET! He created about 6 sketches for them to consider. The sketches are amazing – Drew has Sesame characters surfing on boogie boards in the street on fire hydrant water, Big Bird is surfing, it’s Sesame Street Drew Style. So cool……

I also want to mention that the people I was dealing with at SW were great, too. They have a staff of young, fun, friendly people who were just as excited about this as we were. Until the attorney’s got involved……

You see, I priced the advance based on our normal process of doing these projects, which is, Drew retains copyrights, we keep the original artwork, and we provide their art in PSD files. Turns out, they thought the advance includes the original art pieces. So we had a problem. Had I known that, I would have priced it out accordingly.

I tried to solve it by saying, look, you can purchase the originals from us at an additional fee of $12,000 – which was really a good deal for them. But the attorneys didn’t agree to that. They thought I was being difficult and they didn’t want to put out any more money. (This is the problem with under-pricing and then trying to correct it later.) They did suggest that we share in the sale of the paintings, 50/50. I didn’t agree to that because I felt that it still wasn’t enough compensation for us.

We were at a deadlock – and the exciting project died.

Drew spent a lot of time drawing those sketches and didn’t get paid for it. And I stood there asking myself, what went wrong? A misunderstanding due to the fact that this Co. was used to working with in-house artists that don’t keep anything they create, and I assumed that they understood licensing art.

And this is where you grow. You ask “how could I have made the outcome better.” And here’s the answer:

1.) I should have made it clear up front what the advance was paying for and what it didn’t include (the paintings) I ASSUMED that they knew how it worked. A DEAL MEMO would have avoided this altogether. Which, by the way, I always use a Deal Memo now.

2.) I should have charged more initially. I should have gathered more information in order to price it out properly.

3.) A little compromising might have been a good idea on my part. I could have agreed to give them 1/2 of what the paintings sell for, when and if they sell. We still would have made out, although not as much.

It’s tricky sometimes knowing how to frame a deal. There is no set fee schedule for these things we do, and so I’m constantly winging it.

Why do I share my embarrassing situations here with you? So you learn from my experience. I want you to succeed!

The moral of the story is: Overcharge rather than undercharge. It’s easier to lower your price than raise it later, once you have all the details of the deal.